EU bosses argued that raising the levy would create revenue to plug the black hole in Ireland's debts and reduce the amount paid by others to bail them out.

But Irish ministers insisted the rate of 12.5% - lower than every major European economy - is a sacred cow which could not be sacrificed.

It has been heavily criticised by other EU nations who argue it gives the country too much of an advantage in attracting overseas investment.

French president Nicolas Sarkozy said this weekend: 'It's obvious that when confronted with a situation like this, there are two levers to use: spending and revenues. They have a greater margin for manoeuvre than others, their taxes being lower than others.'

But the Dublin government has fiercely resisted an increase as the low rate is credited with attracting companies to set up shop in Ireland, fuelling the Celtic Tiger's boom of the past decade.

Multinational firms had already warned they could move elsewhere if ministers decided to increase the tax, which could imperil the Irish economy and in turn cost British business billions in lost exports.

Corporation Tax in Britain is currently 8%, although the Coalition is reducing it to 4% this parliament.